Walden on Wheels

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I learned about this book the other day while listening to the radio.  I haven’t finished it yet, but have found it to be so relevant to my struggles with student loan debt that I wanted to help spread the word!

Here’s a brief synopsis:

Ken Ilgunas graduated from the University at Buffalo with $32,000 in student loan debt.  To get out from under that mountain, he worked a series of odd jobs in Alaska (including night cook and tour guide in a town with a population smaller than a typical college class). Determined not to go further into debt when he entered graduate school at Duke University, he secretly lived out of a van- on campus- while working on his graduate degree.

Although I haven’t finished it yet, I highly recommend this book to anyone who is struggling with debt.  Not only does Ilgunas discuss his own (albeit extreme) how-to strategy for paying off debt, I like that he went deeper.  I’m finding that he’s putting words to some of the emotions that I’ve felt about student loan debt–about how ridiculous it is that a bank would let an 18-year-old sign off on a double-digit loan, or how we all go into college believing that we’ll graduate and immediately make enough money to quickly pay off those loans.  He’s brutally honest about how paying off debt is an exercise in complete frustration at times, but a complete victory at others.  He’s also pretty funny and self-deprecating, which just makes the book fun to read.

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A Little Student Loan Payoff Inspiration

I’ve been having trouble lately keeping my eye on the debt-reduction ball.  I haven’t made any huge spending mistakes, but the debt feels overwhelming sometimes.

When I start getting down about being in debt, I try to find stories from people who have conquered or are in the midst of conquering their own.  I found this one tonight, and regardless of what your financial burden is, I hope you find it as helpful as I did:

My Student Loan Story: How I Paid It Off In a Year

Debt Buster vs. Burned Out: Budgeting as a Couple

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There was a post on Dave Ramsey’s blog the other day about the 3 main money fights couples have and how to prepare for them.  In many partnerships, there is a “Debt Buster,” who is willing to throw every penny at debt and a “Burned Out” mate, who is tired of foregoing the extras for the sake of debt reduction.

I can definitely relate.  My fiance and I handle our money differently–I love budgeting and personal finance (doesn’t everyone?), while he tends to spend more freely.  In the past, it didn’t matter how we spent our money individually, because our joint bills were always paid on time and in full.  Once we got engaged, though, I asked him to sit down with me so that we could set up a budget that we both agree on, that would help us achieve our mutual goals.

This seemingly simple request elicited the following response:

<<<Insert wide, fearful eyes and a slight tremble>>>

“…does this mean that I have to start shopping at Goodwill, too?”

Yes, I am very much the Debt Buster in the relationship.  I buy my clothes at Goodwill and groceries at Aldi.  But that doesn’t mean that I require the same of my partner.  What I wanted to do was create a budget that worked for both of us.  Here’s how we did it:

#1: Establish Shared Goals

If you don’t know where you’re going, you’ll never get there, right? We discussed what we want out of the next five years: to pay off our debt, pay cash for our wedding, and save for a house.  By setting these goals, we had a much clearer idea of how much money we needed to allot for each goal.

#2: Make a List of Your Expenses

Figure out how much you each spend on a monthly basis, both on fixed costs and variable costs. Here are the costs that we tallied up:

Fixed Costs

  • Rent
  • Electric
  • Gas
  • Cable
  • Internet
  • Car loans
  • Car insurance
  • Student loans
  • Gym membership

Variable Costs

  • Credit card payments
  • Groceries
  • Shopping/entertainment
  • Misc (e.g. gas for the car, etc.)

(This is not an exhaustive list; add or remove items as needed).

#3: Decide Which Changes to Make

Can you get rid of cable, and use a cheaper service, like Netflix or Hulu?  Can you get a shared phone plan?  Are you using your gym membership, or can you exercise at home?  There is no right answer for anyone–it depends on your lifestyle and your priorities.  Figure out what you can’t (or really don’t want to) change and change the things that don’t matter so much.

#4: Create Your Budget

Tell your money where to go.  Plan for, and account for, every penny.  If you leave too much leeway, I guarantee you the money will disappear.  Even in my role as the Debt Buster, I’ve been in situations where I’ve found myself thinking, “you know, I’ve done so well these past few months–I deserve a break.  I deserve some new clothes/a meal out/a drink with friends/something fun.”  This simple thought might be okay if I stuck to one small treat, but inevitably, that thought snowballs, and before I know it, the money that could have been used to pay off debt has instead been used for mostly meaningless purchases.

For our joint budget, we are using Google Docs (as noted in the picture above–and by the way, Oliver is our dog.  Though not gainfully employed, he’s a valued member of our little family).  That way, we can both access the document at any time to enter updated information or check on our progress.  There are a million different ways to set this up, though, from a spiral notebook,to an Excel spreadsheet, to budgeting software.  It’s all up to personal preference.

We entered our fixed costs and variable costs into the spreadsheet, along with the extra money that we’d throw at debt and savings.  For variable costs, I find it easiest to lump them into three categories: gas, groceries, and miscellaneous.  That makes it very uncomplicated to keep track of my spending.  

We decided that my extra money would go towards debt repayment, and his would go towards wedding and house savings.  I also have an emergency fund of $1000 set aside for us, for the inevitable “Murphy’s Law” incidents that tend to come at the most inconvenient times.

#5: Get Both Partners to Buy-In

This is absolutely, 100%, the most important step.  We identified our goals and created our plan together.  As the Debt Buster, I was much more excited about this process, but I was sure to make it clear that the purpose of the budget wasn’t to keep tabs on his spending.  The purpose of creating a budget was to create a blueprint for how we will achieve these goals together.  This process can’t be one-sided; while that might work for a few months, it probably isn’t realistic long-term.  Budgeting is a team sport, and to be successful, both sides need to have input and agreement at each step in the process.

 

A New Path

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Ah, back to the beginning.

I started Rebel a couple of years ago, after some major life changes led me to move back in with my parents at the age of 27 and go back to working in retail, despite having earned two Master’s degrees.  Trust me, few things humble you more than moving back in with mom and dad while all of your friends are getting married, buying houses, and having kids.

Since that time, I have moved to a different city (but I am, of course, eternally grateful to my parents for their kindness and support), gotten engaged, and gotten a job that I actually enjoy.  By all accounts, life is very good.  And yet…

Between undergrad, graduate school, and a car loan, I built up over $90,000 worth of debt.  Prior to a year or two ago, I thought that was completely normal.  Most people I know have student loan debt and a car loan.  I actually thought I was doing a good job, since I steer clear of credit card debt.  

When I moved, I had no job and quickly realized that my “normal” amount of debt was stifling my ability to live the life I wanted to.  Although I had saved up enough money to float me while I job-hunted, it was extremely disheartening to give my hard-earned money to the loan companies and yet, the balances never seemed to get lower (why hello, compound interest!  It’s not that great to meet you.)

About a year and a half ago, I made the decision that I was going to pay off my debt much, much faster than those darling loan companies wanted me to.  Since that decision, I’ve paid off over $30,000, on an average salary in the $35,000 per year range, leaving my balance a little over $60,000.  

In an effort to document my journey to zero, I tore down the original blog and now present you with the new Rebel Without a Dime.  

<<<Applause>>>  <<<Cheers>>> <<<A little more applause>>>

Here we go…